Get Ready for Global
Tax and Bank Deposit Confiscation
Did you know that voters in NY City elected a self-admitted Marxist for mayor? Mayor-elect Bill de Blasio won with nearly 75 percent of the vote. De Blasio has a long history of Marxist sympathies going back to his support for the Communist Sandinistas.
Prior to the mayoral election, “de Blasio had scrubbed the Marxist connections from his campaign website, an omission that momentarily captured the attention of The New York Times. But once these connections and controversies came to light, he embraced his sordid history. He still embraces liberation theology and his work for the communist Sandinistas in Nicaragua.”
So-called Progressives are anticipating de Blasio’s Marxist sympathies to translate into more wealth redistribution. Chris Shelton, a vice president with the Communication Workers of America union, told liberal sympathizers “to join a ‘revolution’ against the ‘bankers, billionaire and brokers of Wall Street.’”
I’m against the banking system as well because of its incestuous ties to the Federal government and support of both parties. But de Blasio and Shelton have more in mind. They want more government control of the banks, possibly even to nationalize them, and de Blasio has designs on “excessive” wealth.
Do New Yorkers know what they voted for? “As former New York mayor Ed Koch once quipped,” Scott McKim of National Review Online wrote, “‘The people have spoken . . . and they must be punished.’”
A time is coming when we all may be punished.
http://online.wsj.com/news/articles/SB1000142405270230435510457923248055251722
Romain Hatchuel: The Coming
Global Wealth Tax
Indebted governments may soon consider a big
one-time levy on capital assets.
By
Romain Hatchuel
Dec. 3, 2013 7:15 p.m. ETBetween ObamaCare, Iran and last quarter's uptick in U.S. economic growth, taxpayers these days may be distracted from several dangers to come. But households from the United States to Europe and Japan may soon face fiscal shocks worse than any market crash. The White House and New York Mayor-elect Bill de Blasio aren't the only ones calling for higher taxes (especially on the wealthy), as voices from the International Monetary Fund to billionaire investor Bill Gross increasingly make the case too.
In his November investment commentary for bond giant Pimco, Mr. Gross asks the "Scrooge McDucks of the world" to accept higher personal income taxes and to stop expecting capital to be taxed at lower rates than labor. As for the IMF, its latest Fiscal Monitor report argues that taxing the wealthy offers "significant revenue potential at relatively low efficiency costs." The context for this argument is the IMF's expectation that in advanced economies the ratio of public debt to gross domestic product will reach a historic peak of 110% next year, 35 percentage points above its 2007 level.
Between 2008 and 2012, several of the developed world's most fiscally challenged nations (including the United Kingdom, Ireland and Spain) increased top personal income tax rates by an average of 8%. In the United States, the expiration of the Bush tax cuts pushed the highest federal income tax bracket to 39.6% from 35%.
What the IMF calls "revenue-maximizing top income tax rates" may be a good indication of how much further those rates could rise: As the IMF calculates, the average revenue-maximizing rate for the main Organization of Economic Cooperation and Development countries is around 60%, way above existing levels.
For the U.S., it is 56% to 71%—far more than the current 45% paid in federal, state and local taxes by those in the top tax bracket. The IMF singles out the U.S. as the country where raising top rates toward 70% (where they were before the Reagan tax cuts) would yield the most revenue—around 1.25% of GDP. And with a chilling candor, the IMF admits that its revenue-maximizing approach takes no account of the well-being of top earners (or their businesses).
Higher taxes will not save an economy. Foreign aid most often goes to corrupt political leaders and rarely makes its way to the people in need who are most often in need because of their corrupt and oppressive political leaders. Poor nations need a free economy, stable government, and a bottom-up moral worldview that is the essence of self-government and trust. Like their secular counterparts, religious liberals have not learned this lesson.
Wealth confiscation is on the rise, Consider that “in France, President François Hollande finally managed to pass a 75% tax on income above one million euros and now he is seeking to limit the tax benefits of ‘life insurance contracts,’ a long-term savings instrument used by most wealthy households.”
You may be thinking that they’re only after the big guys. That’s how the income tax amendment got passed. It gained popular support because the majority of people were under the delusion that they would never be taxed. Surprise!
After the pockets and back accounts of the wealthy are picked, guess who’s next? “From New York to London, Paris and beyond, powerful economic players are deciding that with an ever-deteriorating global fiscal outlook, conventional levels and methods of taxation will no longer suffice. That makes weapons of mass wealth destruction—such as the IMF's one-off capital levy, Cyprus's bank deposit confiscation, or outright sovereign defaults—likelier by the day.”
Taxes can rise in ways both prominent and subtle. In the United Kingdom, the highly advantageous "resident non-domiciled" status—requiring wealthy residents to pay taxes on overseas earnings only if they "remit" the money to the U.K.—has become much harder to qualify for and more costly after recent reforms.
In France, President François Hollande finally managed to pass a 75% tax on income above one million euros and now he is seeking to limit the tax benefits of "life insurance contracts," a long-term savings instrument used by most wealthy households. As for the uniquely French "impôt sur la fortune," taxing those with net worth above 1.3 million euros, it is alive and well. Japan too is taking steps to increase personal taxation, though it hasn't yet targeted top earners in particular.
Of course these measures won't return the world's top economies to sustainable levels of debt. That could be achieved only through significant economic growth (the good way) or, as the IMF puts it, "by repudiating public debt or inflating it away" (the bad way). In October the IMF floated a bold idea that didn't get the attention it deserved: lowering sovereign debt levels through a one-off tax on private wealth.
As applied to the euro zone, the IMF claims that a 10% levy on households' positive net worth would bring public debt levels back to pre-financial crisis levels. Such a tax sounds crazy, but recall what happened in euro-zone country Cyprus this year: Holders of bank accounts larger than 100,000 euros had to incur losses of up to 100% on their savings above that threshold, in order to "bail-in" the bankrupt Mediterranean state. Japanese households, sitting on one of the world's largest pools of savings, have particular reason to worry about their assets: At 240% of GDP, their country's public debt ratio is more than twice that of Cyprus when it defaulted.
From New York to London, Paris and beyond, powerful economic players are deciding that with an ever-deteriorating global fiscal outlook, conventional levels and methods of taxation will no longer suffice. That makes weapons of mass wealth destruction—such as the IMF's one-off capital levy, Cyprus's bank deposit confiscation, or outright sovereign defaults—likelier by the day.
Mr. Hatchuel is managing partner of Square Advisors, LLC, a New York-based asset management firm.
1 comment:
Do you know how tiny France and England are? For heaven's sake, what the H are they spending all that money on that they can't seem to get enough already? Over three million New York residents have left that state in the recent years due to excessive taxation. These government parasites need to get a revelation already. Taxation is theft. No one should have to pay for the out-of-control spending and fiscal mismanagement by these government parasites.
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